Companies That Had Their IPO in 1994: A Cautious Market

1 minutes reading time
Published 7 May 2024
Author: Emil Persson
Reviewed by: Kasper Karlsson

The financial landscape of 1994 was marked by significant shifts in interest rates and market conditions that impacted various sectors, notably the bond market and initial public offerings (IPOs). As the Federal Reserve embarked on a series of interest rate hikes—the first substantial increases in five years—markets faced heightened volatility. The markets were cautious and companies were hesitant about conducting IPOs, with many deciding to wait for conditions to improve before going public.

Key Insights

  • Challenging IPO Market: The stock market in 1994 was skittish, with many investors adopting a “risk-off” attitude. Stocks were volatile, and companies were hesitant to go public during such uncertain times.

  • Rising interest rates: The Federal Reserve's decision to raise interest rates multiple times during the year played a crucial role in shaping market dynamics. It was also one of the main causes of the cautiousness displayed by investors.

  • Bond market crisis: The interest raises had a profound impact on the bond market, leading to a severe downturn and crisis.

  • Tech on the rise: Tech (and internet) companies would go on to dominate the latter half of the decade, and the first signs of this started to rear its head in 1994.

Interest Rates and Market Conditions

In 1994, the financial markets were significantly impacted by the Federal Reserve's monetary policies. Early in the year, the Fed initiated a series of interest rate hikes, the first significant increases after a long period of stability. This move was primarily aimed at curtailing inflation but led to increased market volatility and put pressure on bond markets. Despite these challenges, the latter part of the year saw a gradual stabilization, and the year ended with major U.S. indices closing the year with only minor gains or slight losses.

One must also keep in mind what earlier years had brought in terms of economic outlook and market conditions. The early 90s had overall been relatively tough for investors, with many having the early 90s recession and the subsequent recovery fresh in mind. The recession officially lasted between 1990 and 1991, but its effects were long-lasting. This, coupled with the fact that interest rates were raised throughout the year, led to volatile markets that had an issue deciding where they wanted to go. Major U.S. stock indices experienced sharp fluctuations, with short-term downturns and recoveries marking the year's trading landscape.

Companies Were Hesitant to go Public

As has been the case throughout the history of the public markets, companies are far less likely to go public during years when market conditions are negative or when investors are standoffish. While the markets were far from being in a panic, investors were far from confident in regard to the economic outlook and what could be expected when looking forward. The overall hesitation to invest, and more specifically, take on larger amounts of risk meant that companies would rather wait until market conditions improved to conduct IPOs. While there were more companies going public than during the recession, the amount of public offerings was nowhere close to what was to come in the following years.

The Bond Market Crisis

The crisis began when the Federal Reserve, led by then-Chairman Alan Greenspan, initiated a series of aforementioned interest rate hikes that caught markets off guard. The first hike occurred in February 1994, when the Fed raised the federal funds rate by 0.25%, its first increase in five years. This was the beginning of a tightening cycle that would see rates increase from 3% at the start of 1994 to 5.5% by the year's end. The rationale behind the Fed’s decision was to preemptively curb inflationary pressures in a recovering economy, but the magnitude and pace of the hikes were not anticipated by the market. This led to a rapid revaluation of fixed-income securities. Since bond prices move inversely to yields, the increase in rates resulted in falling bond prices. The losses were compounded by the fact that many investors had positioned themselves for continued low-interest rates and were caught in unfavorable positions when rates rose.

Setting the Stage for Growth

When looking back at the investment climate and studying the most important years of the decade, it's very easy to gloss over 1994 and come to the conclusion that apart from the Bond Market crisis took place. While this is true in some regards (especially when compared to the chaos of the recession or the euphoria of the Dot Com boom), one must also keep in mind that 1994 set the stage for further growth down the line.

While the topic of when the Dot Com boom in the markets began can be debated back and forth with valid arguments for both sides, it’s usually agreed that the bubble began inflating somewhere between the latter half of 1995 and the first half of 1996. While some tech companies were starting to make a name for themselves on the markets, many of the businesses that would become all the rage a few years later were just going into business during 1994. Perhaps the most notable of these is the founding of Netscape, whose internet browser (going by the same name as the company) would be a key player in making the internet accessible to the masses. Netscape would also go on to see massive success during the early years of the Dot Com boom, only to face severe hardships following the crash of 2000.

Notable IPOs during 1994

While 1994 overall saw relatively few companies going public, there were still some notable public offerings that are worth being aware of. While tech would go on to dominate in the following years, as we mentioned previously, 1994 saw companies from diverse sectors going public.


One of the standouts of the IPO year was that there were several Real Estate Investment Trusts (REITs) that went public in 1994. This includes companies such as Essex Property Trust, Realty Income, and the now-defunct Liberty Property Trust.

American Eagle Outfitters

American Eagle Outfitters, a popular clothing brand with a robust retail presence, conducted its IPO in 1994.

Games Workshop

The company behind the popular tabletop game Warhammer went public in 1994. Games Workshop sells models used to play Warhammer, as well as books and video games, and has an extremely loyal following of players and enthusiasts.

Sirius Radio

Sirius Radio provided both satellite and internet radio and went public in 1994. Following a series of restructurings and mergers, it became part of SiriusXM.


The Chinese computer manufacturer Lenovo went public on the Hong Kong Stock Exchange in 1994.

Capital One

Capital One is one of the larger banks in the United States and also has operations in Canada and the UK. It was listed on the NYSE in November of 1994.


Copart, a major player in the used car market, went public on the Nasdaq during the year.

Further reading: The Rise of Copart: From Salvage Yard to Tech Giant

Closing Thoughts

All in all, 1994 is a year that is often glossed over when looking at the history of the stock market. The collapse of the bond market is by far the most dramatic event during the year, but the fact that most major U.S. indices closed the year having moved very little in either direction when compared to 1993 means that many consider 1994 as somewhat of an uneventful year. The IPO market was lukewarm at best, but much of what would go on to receive a place in the limelight during the coming Dot Com boom was starting to rear its head. The founding and introduction of the Netscape Internet Browser is the most notable example of this, but many of the key players in the upcoming crash and bubble were starting to make a name for themselves during the year.

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